OECD Better Life Index
Measurement of well-being across countries / From Wikipedia, the free encyclopedia
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The OECD Better Life Index, created in May 2011 by the Organisation for Economic Co-operation and Development, is an initiative pioneering the development of economic indicators which better capture multiple dimensions of economic and social progress.[1][2]
The platform consists of a dashboard, that provides data and insights into key indicators - measuring areas such as wellbeing, environmental quality, quality of public services and security - alongside an interactive tool Your Better Life Index (BLI),[3] which encourages citizens to create their own indexes by ranking each of the indicators according to the importance in their lives.
The index and tool were created as part of the OECD Better Life Initiative. This initiative began in 2011 in line with the recommendations of the Commission on the Measurement of Economic Performance and Social Progress, also known as the Stiglitz-Sen-Fitoussi Commission, whose recommendations sought to address concerns that standard macroeconomic statistics like GDP failed to give a true account of people's current and future well-being.[4] The initiative's goals are to develop social and wellbeing indicators that can better reflect growth focusing on four key areas; environmental sustainability, increased wellbeing, falling inequality, and systems resilience. The 'beyond growth' approach to economic progress is relatively new and the OECD Better Life Initiative promotes the co-production of what we might standardise by facilitating conversation between the public and policymakers.
Users can create their own economic index by ranking 11 areas of socio-economic progress by what is important to them. This generates a ranking so users can see how their country compares. Users are encouraged to share their indicators with others on the platform to view the latter's and discuss similarities and differences.
Users can also choose to share their data with OECD and will then be asked to provide more demographic data about their situation. The OECD Better Life Initiative then analyses all users input data and reports the findings in a bi-annual report named How's Life? Well-being. The data used in the report consists of 80+ indicators including measures on inequality and further socio-economic indicators. The findings reflect what is important to citizens, and how their current socio-economic situations reflect in the areas of governance that they prioritise. These insights are then used to guide governments to put well-being at the centre of their policymaking by shedding light on what well-being means to their citizens.[5] In this way, by using the tool, citizens can shape public policy.
First published on 24 May 2011, the index consists of 11 topics of well-being.[6] Each of the 11 topics is made up of 1-4 indices and these are fine-tuned over time as insights are derived from data collected in previous years.[7]
Initially, each of the 11 topics are equally weighted to generate scores and ranks of 30+ countries by each area of well-being. The topics are given below:
- Housing: housing conditions and spendings (e.g. real estate pricing)
- Income: household income (after taxes and transfers) and net financial wealth
- Jobs: earnings, job security and unemployment
- Community: quality of social support network
- Education: education and what one gets out of it
- Environment: quality of environment (e.g. environmental health)
- Governance: involvement in democracy
- Health
- Life Satisfaction: level of happiness
- Safety: murder and assault rates
- Work–life balance
The official definitions for the topics and the indices which make them up are stated in the OECD Better Life Index definitions
Users create their own economic indexes by scoring each of the 11 topics from 0 to 5, where 0 reflects that this topic is not important to the user and 5 it is very important. The tool shows countries ranked in a chart where each of the nations is represented by a flower, and each of the topics is a petal, where its size is defined by its score in that area. The tool was designed by Berlin-based agency Raureif in collaboration with Moritz Stefaner and is very user-friendly.
The score that the user inputs for a topic is then used to calculate the weighting for that topic in the index. The weights are calculated using the formula which ensures the sum of weights totals 100%.
Each of the 11 topics consists of between 1-4 individual measures that make up that topic. The individual measures come in many units (percent, dollar, years etc.) and so to calculate the total score for that topic, the measures are normalised, resulting in a score χ between 0 and 1 per measure. If the indicator is something negative, for example, unemployment, then we take the score as 1-χ.
For each topic, the score are then added up and divided by the total number of measures used to make up that topic, this gives the total score for the topic. For example, a countries score for health would be calculated by: [8]